Pakistan: FrieslandCampina eyes up majority stake in Engro Foods

Dutch dairy firm FrieslandCampina has unveiled its intention to aquire a majority stake in Engro Foods, the leading Pakistani dairy firm, as it announced its latest financial results.

The company said that the proposed acquisition formed part of its updated Route2020 programme, which sees strategy resources deployed to achieve sustainable long-term growth through existing and new product-market combinations. FrieslandCampina said that it would start investigating a possible acquisition of an interest up to 51% in Engro Foods in Pakistan, a stake which acould cost up to €450 million ($490 million), according to a report in the Irish Examiner.

Engro Foods is among the largest and fastest growing companies in Pakistan, with a portfolio comprising some of the country’s best-selling brands including Olper’s, Olper’s Lite, Omore, Dairy Omung, Olper’s Lassi and Tarang. It generated 43.03 billion PKR ($410 million) in revenue in 2014 and employs more than 1,500, according to the company webpage.

Meanwhile, FrieslandCampina reported that total revenue for 2015 fell by 0.7% to 11.3 billion ($12.3 billion) as a result of lower sales prices. However gross profit rose by 36.2% to €2 billion ($2.2 billion) due to more favourable sales mix (higher portion of the revenue generated by products with higher added-value) and lower input costs. Overall profit rose to €343 million ($376 million), including €34 million ($37 million) currency translation effects.

FrieslandCampina CEO Roelof Joosten commented: “FrieslandCampina’s unique dairy chain underpins its activities. In recent years FrieslandCampina has performed well in a number of attractive market positions. The focus remains on sustainable growth of the most valuable product market combinations and product market combinations that absorb mainly member milk. At the same time we will continue to manage in a very cost-conscious way so that the means to achieve growth are available”.